(1) The interest rates used in determining the minimum standard for the valuation shall be the calendar year statutory valuation interest rates as defined in this section for:

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Terms Used In Utah Code 31A-17-506

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Annuity: means an agreement to make periodical payments for a period certain or over the lifetime of one or more individuals if the making or continuance of all or some of the series of the payments, or the amount of the payment, is dependent upon the continuance of human life. See Utah Code 31A-1-301
  • Company: means an entity that:
              (2)(c)(i) has written, issued, or reinsured a life insurance contract, accident and health insurance contract, or deposit-type contract in this state and has at least one such policy in force or on claim; or
              (2)(c)(ii) has written, issued, or reinsured a life insurance contract, accident and health insurance contract, or deposit-type contract in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state. See Utah Code 31A-17-501
  • Contract: A legal written agreement that becomes binding when signed.
  • Equal: means , with respect to biological sex, of the same value. See Utah Code 68-3-12.5
  • Individual: means a natural person. See Utah Code 31A-1-301
  • Insurance: includes :
              (96)(b)(i) a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
              (96)(b)(ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
              (96)(b)(iii) a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
  • insurance company: means a person doing an insurance business as a principal including:
              (104)(a)(i) a fraternal benefit society;
              (104)(a)(ii) an issuer of a gift annuity other than an annuity specified in Subsections 31A-22-1305(2) and (3);
              (104)(a)(iii) a motor club;
              (104)(a)(iv) an employee welfare plan;
              (104)(a)(v) a person purporting or intending to do an insurance business as a principal on that person's own account; and
              (104)(a)(vi) a health maintenance organization. See Utah Code 31A-1-301
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • life insurance: means a contract that incorporates mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual. See Utah Code 31A-17-501
  • Policy: includes a service contract issued by:
              (150)(b)(i) a motor club under Chapter 11, Motor Clubs;
              (150)(b)(ii) a service contract provided under Chapter 6a, Service Contracts; and
              (150)(b)(iii) a corporation licensed under:
                   (150)(b)(iii)(A) Chapter 7, Nonprofit Health Service Insurance Corporations; or
                   (150)(b)(iii)(B) Chapter 8, Health Maintenance Organizations and Limited Health Plans. See Utah Code 31A-1-301
  • Policyholder: means a person who controls a policy, binder, or oral contract by ownership, premium payment, or otherwise. See Utah Code 31A-1-301
  • Premium: includes , however designated:
              (156)(b)(i) an assessment;
              (156)(b)(ii) a membership fee;
              (156)(b)(iii) a required contribution; or
              (156)(b)(iv) monetary consideration. See Utah Code 31A-1-301
  • Rate: means :
              (163)(a)(i) the cost of a given unit of insurance; or
              (163)(a)(ii) for property or casualty insurance, that cost of insurance per exposure unit either expressed as:
                   (163)(a)(ii)(A) a single number; or
                   (163)(a)(ii)(B) a pure premium rate, adjusted before the application of individual risk variations based on loss or expense considerations to account for the treatment of:
                        (163)(a)(ii)(B)(I) expenses;
                        (163)(a)(ii)(B)(II) profit; and
                        (163)(a)(ii)(B)(III) individual insurer variation in loss experience. See Utah Code 31A-1-301
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
     (1)(a) life insurance policies issued in a particular calendar year, on or after the operative date of Subsection 31A-22-408(6)(d);
     (1)(b) individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982;
     (1)(c) annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and
     (1)(d) the net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts.
(2) Calendar year statutory valuation interest rates:

     (2)(a) The calendar year statutory valuation interest rates, “I,” shall be determined as follows and the results rounded to the nearer 1/4 of 1%:

          (2)(a)(i) for life insurance:

     I = .03 + W(R1 – .03) + (W/2)(R2 – .09);

          (2)(a)(ii) for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:

     I = .03 + W(R – .03),

     where R1 is the lesser of R and .09,

     R2 is the greater of R and .09,

     R is the reference interest rate defined in Subsection (4), and

     W is the weighting factor defined in this section;

          (2)(a)(iii) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in Subsection (2)(a)(ii), the formula for life insurance stated in Subsection (2)(a)(i) shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years, and the formula for single premium immediate annuities stated in Subsection (2)(a)(ii) shall apply to annuities and guaranteed interest contracts with guarantee duration of 10 years or less;
          (2)(a)(iv) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in Subsection (2)(a)(ii) shall apply; and
          (2)(a)(v) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in Subsection (2)(a)(ii) shall apply.
     (2)(b) However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of 1% the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using the reference interest rate defined in 1979, and shall be determined for each subsequent calendar year regardless of when Subsection 31A-22-408(6)(d) becomes operative.
(3) Weighting factors:

     (3)(a) The weighting factors referred to in the formulas stated in Subsection (2) are given in the following tables:

          (3)(a)(i)

               (3)(a)(i)(A) Weighting factors for life insurance:Guarantee Duration (Years)Weighting Factors10 or less:.50More than 10, but less than 20:.45More than 20:.35.
               (3)(a)(i)(B) For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy;
          (3)(a)(ii) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: .80
          (3)(a)(iii) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in Subsection (3)(a)(ii), shall be as specified in the tables in Subsections (3)(a)(iii)(A), (B), and (C), according to the rules and definitions in Subsection (3)(b):

               (3)(a)(iii)(A) For annuities and guaranteed interest contracts valued on an issue year basis:Guarantee Duration (Years)Weighting Factors for Plan TypeA B C5 or less:.80.60.50More than 5, but not more than 10:.75.60.50More than 10, but not more than 20:.65.50.45More than 20:.45.35.35
Plan Type
A
B
C
               (3)(a)(iii)(B) For annuities and guaranteed interest

contracts valued on a change in fund basis, the

factors shown in Subsection (3)(a)(iii)(A)

increased by:                                        .15     .25     .05

Plan Type A B C

               (3)(a)(iii)(C) For annuities and guaranteed interest

contracts valued on an issue year basis, other than

those with no cash settlement options, which do

not guarantee interest on considerations received

more than one year after issue or purchase and for

annuities and guaranteed interest contracts valued

on a change in fund basis which do not guarantee

interest rates on considerations received more

than 12 months beyond the valuation date, the

factors shown in Subsection (3)(a)(iii)(A) or

derived in Subsection (3)(a)(iii)(B) increased by:               .05     .05     .05.

     (3)(b)

          (3)(b)(i) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guaranteed duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.
          (3)(b)(ii) Plan type as used in the tables in this Subsection (3) is defined as follows:

               (3)(b)(ii)(A) Plan Type A: At any time policyholder may withdraw funds only:

                    (3)(b)(ii)(A)(I) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company;
                    (3)(b)(ii)(A)(II) without such adjustment but in installments over five years or more;
                    (3)(b)(ii)(A)(III) as an immediate life annuity; or
                    (3)(b)(ii)(A)(IV) no withdrawal permitted.
               (3)(b)(ii)(B)

                    (3)(b)(ii)(B)(I) Plan Type B: Before expiration of the interest rate guarantee, policyholder withdraw funds only:

                         (3)(b)(ii)(B)(I)(Aa) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company;
                         (3)(b)(ii)(B)(I)(Bb) without such adjustment but in installments over five years or more; or
                         (3)(b)(ii)(B)(I)(Cc) no withdrawal permitted.
                    (3)(b)(ii)(B)(II) At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.
               (3)(b)(ii)(C) Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either:

                    (3)(b)(ii)(C)(I) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or
                    (3)(b)(ii)(C)(II) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
          (3)(b)(iii) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options shall be valued on an issue year basis. As used in this section, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
(4) Reference interest rate: “Reference interest rate” referred to in Subsection (2)(a) is defined as follows:

     (4)(a) For life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of the Monthly Average of the composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
     (4)(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
     (4)(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in Subsection (4)(b), with guarantee duration in excess of 10 years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
     (4)(d) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in Subsection (4)(b), with guarantee duration of 10 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
     (4)(e) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
     (4)(f) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in Subsection (4)(b), the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody’s Investors Service, Inc.
(5) Alternative method for determining reference interest rates: In the event that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds is no longer published by Moody’s Investors Service, Inc. or in the event that the National Association of Insurance Commissioners determines that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody’s Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by rule made by the commissioner, may be substituted.

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